It may be best to market it as 12.5 feet vs 13.You say good location--but less than optimal layout.If it's an upscale area (or a wanna-be upscale area) maybe put in a minibar and doll up the stairway using stripper and whatever...Also if you have another 3 or 4 feet in front of the front door--and have the ability to push the front wall out into an \____/ maybe you could add some side windows plus some sq ft.And glassing the end with a big patio door might be unusual, but might also make the unit feel larger.Being it's an out of the ordinary layout (shotgun shack) and in a good area, something like in pic (1) might draw a different type of renter than your standard apartment unit--a little more upscale...but that adds risk to the mix too...as these people may not be as plentiful as section-8.It all depends on your business model.Just some food for thought.Good Luck!

Further, you can also place "reasonable" restrictions on the animals, including the requirement of a recent veterinarian report on the health and vaccine status, with annual updates; must be spayed or neutered unless contraindicated by veterinarian; must be in a carrier or on a leash (unless this prevents them performing their service or task) in common areas, especially elevators, stairways, and other areas where people would be in confined spaces; must clean up after the animal properly in common areas; offensive odors must not emanate from the residence; aggressive or nuisance behavior (such as extended periods of barking NOT related to the service or task they provide) can be prohibited, and potentially grounds for removing the animal and/or the resident; animal must have a chip or collar with owner's identifying/contact information; must have appropriate city/county license if required locally; and photos of the animal for your records.A thorough and clear policy will deter many of those that are less than sincere from applying when they are made aware of the policy details early in the process...like at the viewing, and mention of the policy in ads.

I might offer to ignore the fence encroachment for now in exchange for ingress/egress via the prior permissive use until the new stairway is complete.

If so is a stairway as a means of egress to the outside required?

If you redo those steps - yes the inspector will expect the stairway to be code and there is a height from steps clearance requirement.

Spiral stairways are permitted, provided the minimum width shall be 26 inches (660 mm) with each tread having a 7 1⁄2 inch (190 mm) minimum tread depth at 12 inches from the narrower edge.

There is also common area repairs I want to do: a couple of new water heater, new carpeting on the stairway, paint, etc.

I thought the estimate was conservative considering that it doesn't have trusses and has a 15+ ft ceiling peak, three double window dormers and access via two separate stairways. 

These old houses sometimes have sewer issues, and this place looks like Roots City International.To me the house looks "Cared About", I see some proper looking wood trim under the porch, the porch columns were not replaced with 4x4's, all windows match, etc...Plus this house might have an interesting set of interior upgrades such as built in shelves, etc...I say that because the front door looks like it has 2 side lights (a big upgrade in the olden days).And I suspect the stairway may have some elegance to it, such a a landing where that small window is.With all of the close in trees, the gutters may be full of leaves and you may find rotting wood at the edges of the eaves, and many of these old homes a have boards under the shingles vs plywood, so you only talking about replacing a board vs a big rectangle.Good Luck! 

Total Square Feet: Exclude: BathroomsRemove / Uninstall the following:· Place colored items in storage shed; the rest can be kept or disposed of.From Closets: Current ShelvingFrom Wall -- Old gas heater (living space wall)Facing back door.Gas heater thermostat (lower bedroom)Baseboard heater (lower bedroom)Two baseboard heaters (living room, under stairway)Coat hangar (bedroom)Two thermo sensors (bedroom and hallway) .